Neeraj Saluja, MD, Sel Manufacturing, said there has been a bit of pressure on margins on account of cotton prices moving up. “However, the company is well covered for its future raw material needs.”

Excerpts from CNBC-TV18’s exclusive interview with Neeraj Saluja:

Q: Your Q4 revenues have grown very sharply by 169%, while net profit has grown well but a little slowly at 52%. Would you say that there was some pressure on margins?

A: Yes, there has been a bit of pressure on margins with cotton prices moving upwards, but the company is well covered for its future raw material needs.

Q: How would you expect to see FY09 panning out, considering that cotton continues to remain expensive globally? What kind of margins do you expect and what kind of revenue profit projections can you make?

A: It is just a correction in cotton prices. In the commodity sector with all commodities going up, cotton prices are forming in continuation to that. If the prices don’t remain at this level, the cultivation of the crop will go down. Keeping this in mind, I am quite optimistic that the yarn market would be accepting a hike in prices.

Q: You are going in for some kind of value-added products like designer terry-towels. How do you expect revenue growth to continue in FY09?

A: The company has major expansion plan for the next two years which is into technical textiles, towels, power, and garments to be expanded on a regular basis. On topline and bottomline, we are confident to grow at a very good pace. With the power pricing being implemented, the bottomline will further be strengthened.

Q: How much of your topline has been contributed by Kudu Industries in which you have recently acquired stake?

A: If you see garments, they constitute the 50% of the total turnover. It has grown almost 100%, so in the current year we have acquired two garment facilities in Ludhiana. They came operational in Q4 of last year. The company is eyeing another inorganic growth in the garmenting sector.